Greetings readers, it’s been 7 years since I first wrote on this issue, and to date it remains still one of the most asked about topics. This month I present to you a re-visitation, and update!

According to Salary.com, a Licensed Professional Counselor (or ‘Family Counselor’) working in Cambridge, MA makes a median average of $43,144 per year. A Substance Abuse Counselor (or ‘Chemical Dependency Counselor’) makes an average of $57,411.

In a city where the average cost of a 1500 square foot home exceeds a million dollars ($747 per foot, and expected to grow 3.6% this year, according to Zillow), working as a fulltime therapist is financially untenable. And while Cambridge (where I lived when I went into private practice) is expensive, the math isn’t too dissimilar in other cities across the country. For example:

A 1500 square foot home in Bethesda, MD will run $685,500. Average Counselor Salary: $41,817

A 1500 square foot home in Denver, CO will run $511,500. Average Counselor Salary: $38,329

A 1500 square foot home in Austin, TX is a bargain at $310,500. Average Counselor Salary: $37,343

Nobody chooses the profession of counseling for the high pay. But is financial struggle our collective fate? Is the practice of counseling relegated to people who don’t need to make a living, or as a side passion one must pursue separately from a full-time job? I hope not, and I don’t believe so. I’ve found that with hard work and good planning, earning an income of $100,000 per year in private practice is an obtainable goal.

Money in Private Practice

As counselors, we loathe to discuss money–we want to focus on patient care. However, money is a necessary part of keeping the practice doors open. The fact is, you can’t help anyone if you’re out of business, and a counseling practice is precisely that—a business. Hence, in this column we’re going to look at the financial aspects of running a viable counseling business/practice.

Note: the following numbers are estimates for a solo-practitioner in private practice. You’ll need to adjust expenses, client fees, and volumes based on your practice goals and the costs of your area. I’ve tried to be conservative when referencing revenues, and liberal when listing expenses.

Client Fees

Client fees vary depending on the location of your practice, and the payer(s) you work with. For example, in Oregon a masters-level clinician accepting 3rd party insurance payments (for example, a combination of Anthem, United Healthcare, and Cigna) might earn $99 for a diagnostic evaluation (90791). Ongoing appointments for individual or family psychotherapy (90834/90837/90847) might pay around $70.

For now, let’s estimate that all your clients pay for services with insurance, and your average fee for a 45-minute session is $75.

Fulltime Caseload

The number of sessions that constitutes a fulltime caseload is hotly debated. Some professionals feel that 30 sessions per week is too heavy of a caseload, while others find that they can comfortably serve 40+ clients per week (I say ‘hotly’ debated because providers who opt for fewer clients have been known to accuse those with heavier caseloads of being unethical.

Contrarily, providers who manage heavier caseloads have criticized others as being unorganized, or ‘not cutout’ for fulltime private practice). I wish not to contribute to this contentious debate, but instead split the difference!

I find 35 sessions per week to be a sustainable number for a full-time clinician. With this number, if you’re providing 45-minute sessions, that’s 26.25 hours of face-to-face work with clients each week. With schedule gaps and practice management duties, you’re looking at a 45-hour workweek. It’s a full-time job to be sure, but not unendurable. In addition, let’s say that you give yourself a modest 4-week vacation each year.

Practice Expenses

Now that revenues are calculated, we need to subtract any/all practice expenses. There are large, small, and hidden costs to running a practice: from patient parking, to coffee, to organic tissues, to printer ink. Below is a sample (broad category) expense list.

Furniture, if not financed, will be an initial outlay of several thousand dollars.

Professional dues, CEUs, & liability insurance = $800 per year

This number is often contested as it applies to the costs of professional CEUs. Note that $800 won’t get you to a national conference, but it will cover the basics. There are quality low cost CEU options, one just needs to look.

Accounting & Legal fees = $500 per year

Advertising and Marketing = $6300 per year

There’s no ‘correct’ amount to spend on marketing or advertising. In fact, many counselors spend almost nothing. However, for the sake of this exercise, let’s earmark 5 percent of your gross yearly revenue for the marketing and advertising your practice (5% of $126,000 (yearly revenue) = $6,300).

Medical Billing = $6930 per year

While some counselors prefer to do their own medical billing, you may wish to hire a company to handle it for you. A customary cost is 8 percent of what the billing company collects, which comes out to around 5.5 percent of your gross revenue. Note that it’s 5.5 percent because medical billing companies don’t customarily take a share of client deductibles, or co-pays (5.5% of $126,000 (yearly revenue) = $6,930).

Other Miscellaneous = $1000 per year

Calculations:

$126,000 (revenue) – $25,310 (expenses) = $100,870 (net)

And there you have it! A 6-figure private practice.

Variables

While the above provides a theoretical outline of private practice financials, no counseling practice will perfectly mirror the example. To help you determine with greater accurately your finances, here’s a list of variables that could potentially detract from, or enhance, your practice’s earnings.

Possible Detractors:

The estimates above assume that one will be able to maintain a caseload of 35 client sessions per week. Low new client volume, or high client attrition, can reduce one’s weekly session count.

To expedite the building of a caseload, more money could be invested into advertising (or time spent in professional networking, which could detract from your available client hours).

Client cancellations and/or client no-shows could lower income, depending on how one manages their practice schedule.

The estimates above do not account for unpaid session fees (subtract up to 4 percent).

If you accept credit cards, subtract 2-3 percent revenue from whatever percentage of session fees you expect to process with plastic.

The “net” above doesn’t include the cost of health insurance, retirement planning, or taxes, which are often partially covered by an employer. While not truly a cost of business, these items will detract from your expendable income.

Possible Enhancements:

After building a strong reputation, and establishing active referral sources, you may be able to eliminate advertising and marketing (reclaim up to 5 percent).

Owning a business might have legitimate tax advantages. For example, your mobile phone might qualify as a business expense (meaning it’s paid for with pre-tax money).

If you see some (or all) cash-pay clients, you can reduce or eliminate medical billing expenses (reclaim up to 5.5 percent).

If you provide 40 sessions per week on average (that’s 30 face-to-face hours with clients), add $18,000 revenue.

If you reduce your time off from 4 weeks to 3 weeks per year, add $2,625 revenue (not worth it!).

As a rule, counselors aren’t motivated by money, or excited by numbers (who enjoyed psych-stats?), but understanding the financial aspects of your practice can help you to have a successful career doing what you love, and helping others. As always, I welcome your questions, and comments @anthonycentore.

Anthony Centore

Anthony Centore Ph.D. is Founder and CEO at Thriveworks--a counseling practice, focused on premium client care, with 80+ locations across the USA. He is Private Practice Consultant for the American Counseling Association, columnist for Counseling Today magazine, and Author of How to Thrive in Counseling Private Practice. Anthony is a multistate Licensed Professional Counselor and has been quoted in national media sources including The Boston Globe, Chicago Tribune, and CBS Sunday Morning.

333 Comments

Wow, that must be nice to not have to pay any taxes on that income. Where I am, there are federal, state, and city taxes. Oh, and $460 a year for professional dues, liability insurance and CEU’s- that a joke right?! Professional dues alone are that much, never mind the others. Rather than give pie-in the sky numbers, I would recommend you be a bit more realistic.

Dear “Bob”, we were reluctant to publish your comment because of your fake name and fake website. But we decided we would approve your comment and respond, so that we could address your points 🙂

About taxes–yes, of course you need to pay taxes! You need to pay taxes whether you have a $100,000 salary, or your private practice makes $100,000. This does not detract from the accuracy of our math at all. About professional dues, to answer your question we are not joking. Membership with the American Counseling Association (ACA) is $130.00 a year. Membership with the American Mental Health Counselors Association (AMHCA) is the same (it might be $125). These are both well within the budget we detailed. As for CEUs, if one keeps their eyes and ears peeled, one can find lots of free and deeply discounted opportunities for CEUs. Plus, CEUs in most states are due every 2 years. If one has a membership with the ACA, that leaves $330 a year, or $660 every 2 years for continuing education–this won’t afford you a fancy out of town conference, but will get you your CEUs. In addition, you can note that we also added an additional section titled “Other Miscellaneous”, and padded expenses with an additional $540.00 a year. So there should be no issue here (note, we are also pinching pennies, relatively speaking, when looking at the big picture numbers.) “Bob”, we really appreciate you reading our articles, and providing your thoughts. I hope you will give us a chance for an open discussion with you!

Yes! We are writing an article now about that. Also, Thriveworks can help you get new clients in your office! Stay tuned for the next article, or if you’d like us to actively help you, give us a call at 1-855-4-THRIVE! Sincerely, Dr. Anthony Centore

I appreciate your advice & especially the breakdown of the numbers. I’ve run similar numbers myself multiple times to determine the profitability of a private practice. What I’ve found is that it is indeed possible to break the six figure mark (I factored in $85 a session & as much as $850 for rent), but it all depends on how many clients you see each week

Thanks Paul, I appreciate your comment! And I agree with you, the numbers only work if one is able to consistently book enough clients. It seems that low client volume is perhaps the hardest part of the equation for most counselors…

Who gets that amount per session billing insurances? Not possible. The rates go from $57 to $80 dependent on insurance with more insurances paying in the lower digits for a 45 minute session, so your estimates are very high. Taxes on self employed are at 35%. I live in Massachusetts and the bare bones billing is more then 6%. Use of credit cards is well over a 2% they charge monthly “cyber” security fees. The amount of paperwork, UR, intakes, charting, credentialing, updating, collateral contacting, 24 hour on call, is well over 15 and who gets clients in/out, copay, etc in 38-45 minutes? They cut pay rates when they cut session times. And some make the billing process and extended authorizations ridiculous. Why the need? I don’t even have time usually to get back to my referrals. I guess good part is I don’t need marketing.

Why bill insurance anyways…Ive read a few articles promoting out of network… if you can do “out of network” you might make more per hour as well…$70-$80 is modest. 33 clients a week is totally doable. Even if you made 90k and subtracted expenses at 20k, you are still looking really good. The big thing is deciding whether you want to be an insurance whore and take any client at a low price. We need to pressure insurance to base line pay $90 an hour for services. $70 is a joke. Especially for how much time, education, debt, and involvement it requires. So the key here is to pressure insurance to raise their rates since they are raising their rates on clients. You can also do a type of insurance where they pay for your hourly rate (lets say a modest $150) and then submit paperwork to their insurance and then their insurance refunds them the amount they are willing to cover. Takes the load off you. Ive heard this is great in regards to time and paperwork, and you still get insurance clients…..I’m not sure which route I want to go. I’d rather be slower, spend more time on 6 clients a day and make $150 a session as “out of network” than have 12 clients a day at $70-$80. Less stress. And insurance often times does cover up to a decent amount… Im weighing the pros and cons. Right now I make 100k a year in a different field of work, but my expenses are well over 40k. So It’s going to be nice once I’m on my feet as a psychotherapist to have way less expenses. When I see people complain about taxes on here, taxes happen to everyone….so I’m not sure what the complaint is here- this is a gross assesment. My question is, can you do both insurance and cash?? Or can you bill a client at $150, the insurance pays $70 and you can have the client cover the rest minus the copay? Curious if thats a thing people do when taking insurance….

Hello Sarah and all of the above. I am about to start working on my master’s degree. My goal is to work with children once I get my LPC. I have a question however. I see most of these comments were from 2011.I want to fast forward to today, 2018, and see if the numbers have changed any as far as income, what insurances pay, how much a counselor charges, etc. Also I want to stay in the loop with Sarah’s questions as she asked some of the same questions I have as far as having insurance paid clients, cash clients and mixed where you bill the insurance and the client pays what they don’t cover. Thanks!

Carolyn C
on November 28, 2018 at 3:55 pm

To Sarah and others interested: When you contract with an insurance company, you agree to accept what they pay you. If the company thinks a 55-minute session is worth $100, then that is what you agree to accept, even if your hourly rate is $150. So, insurance may pay you $75 and the client’s copay is $25. That’s all you get. If you ask clients to pay the other $50 (bringing your total to $150) this constitutes fraud.

I’m of 2 minds about responding. 1. I know how our industry and our own desire to help others push us to take less money and to work longer hours. 2. But I have some better ideas that I have proven for myself that you might want to consider. There are no guarantees and this strategy requires some courage. And it requ8ires a lot of faith in yourself and in your abilities.

I’m 69. I am an intern in private practice by myself in marriage and family. I have practiced over the last 20 years under a church umbrella. I also have some specialized training – which you could get if you want to work with trauma.

Fee. This was frustrating. My first supervisor charged $40 for my services. I got $22 of that. After a bit we parted company. I told her I was going into private practice, which my state allows, and what did she think I should charge? She said there was no way I could get more than $50. Hmmm. I didn’t agree but I started at $50 to see what would happen. I got a few clients. But my marketing background told me that clients don’t have a clue what an “intern” is and they don’t really have much of an idea as to what therapy costs. And I found that NEITHER DO THERAPISTS!

Try this in your market. Go on Psychology Today and make a spreadsheet of fees. Note speciality, education, years of experience, brand of therapy (LPC, LMSW, MFT, or whatever other letters you can find). Intern or fully licensed. Now, print the spreadsheet on one page. What do you notice? I’ll tell you what I noticed. With the exception of 2 PhD psychologists who charged $225 each there was no rhyme or reason as to who charged what. Psy D’s and PhD’s were charging $40. Interns were charging $75. Master’s level therapists were charging $100. My therapist charged $150, no insurance, and accepted only cash.

My conclusion? I could charge more, maybe a lot more. So I tried $75 and got 3 clients. The next client I charged $80 and got it. Then I decided I would charge $85. Got it, too. Then I said, “this is stupid. Bite the bullet and charge $125. I got that, too. Everybody didn’t bite. I lost some because I don’t take insurance. And the only clients I lost because of the size of my fee were the ones I wouldn’t have gotten anyway because wanted me to take insurance. I have more to say about the insurance issue, but not now.

My problem was that I was getting only about 7-10 sessions a week. Sometimes less. What to do? Before I decided to go private, I called on a couple of supervisors who had a practice in which they hired interns. They charged $125 and hour. But they only wanted to pay me $40. Reminded me of that scripture in the Bible about not muzzling the ox who’s grinding the grain but to let them eat freely. I learned 2 things from them: 1) that I didn’t want to work for them and 2) how they got clients!

Basically Google AdWords I did the same spending about $200 a week. After about 5 or 6 months I had 16 clients and I didn’t want to pay Google anymore. Plus I had Psychology Today which has been great. But then there was attrition. I found my numbers sliding. What to do?

Well, doofus, have you prayed? Yeah, well, of course. I’m a praying kind of guy. But I hadn’t been praying about my business that I had been working so hard at. So, I prayed. “Father I really need some help would you send me…2 new clients. Who can pay my full fee?’ Within three days, the Lord came through. About a week later I screwed up my courage and my humility and went back to the well. “God, thanks again for those 2 clients but I wonder if you would send me 3 more?” Within a few days I had 3 new clients. I looked at my numbers again and they weren’t were I needed them to be so I asked again for 2 clients. For the 3rd time in a little over 4 weeks God gave me what I asked for. That is basically my acquisition strategy, now. If you don’t like it I suggest you stay with Google AdWords and Psychology Today. I think you will do quite well.

Now ask yourself
1. Why am I charging so little? Do I have the right to get a decent return on my educational investment and my current time investment?
2. Do I want to retire with more than Social Security? Working for yourself you better be making some money and saving as much as you can. Do you really want to be doing therapy when you’re 70? I do but you may not. If not how will you achieve that goal?
3. Can I find the courage to spend a few hundred dollars a month to increase my caseload.

One final thought on caseload. I don’t see 35 clients a week. I couldn’t handle it. My trauma clients are too heavy. I see between 16 and 23. Everybody doesn’t pay $125. I still have a couple of clients at $40, a couple at $75, and one at $25 who I see once a month. If everybody makes this week – and a couple of weeks in August were terrible! – I will gross in excess of $8,000 for August.